3M, Honeywell set takeovers to expand product lines

3M Co and Honeywell International Inc signed separate takeover deals to expand their broad lineups of industrial goods at a time of uncertainty for the U.S. economy, the top U.S. manufacturers said on Monday.

3M said it would pay $860 million to buy industrial ceramics company Ceradyne Inc. This is the biggest takeover deal for the maker of products ranging from Post-It notes to films used in television screens since it named Inge Thulin chief executive officer in February.

Honeywell announced plans to pay $525 million in cash for a 70 percent stake in privately held Thomas Russell Co, which makes equipment used in natural gas production. Big U.S. manufacturers including General Electric Co have invested heavily to boost their exposure to that sector amid a surge in U.S. natural gas production driven by advances in hydraulic fracturing, or fracking, technology.

The announcements come less than two weeks after the CEOs of both Honeywell and 3M separately said that a worrisome world economic outlook was making it easier to negotiate acquisitions by tempering expectations of what companies would fetch.

"If the asset makes sense and the price makes sense, you go for it," said independent analyst Brian Langenberg.

Ceradyne shares were up 43 percent at $34.94 in early trading, just below the $35.00 offer price from 3M, whose stock gained 1 percent to $93.32. Honeywell rose 1.7 percent to $60.74.


Thulin told investors on September 19 that he would seek fewer, but larger, deals than his predecessor, George Buckley, but he held to the company's long-term goal of making $1 billion to $2 billion in acquisitions per year.

The company has yet another large deal in the works - it is working to overcome U.S. regulators' objections to its planned $550 million takeover of Avery-Dennison Corp's office products business.

Meanwhile, Honeywell's UOP arm has the right to buy the remaining 30 percent of Thomas Russell, at a price linked to the business's operating income.

The decade-old Thomas Russell company should generate 2012 revenue of about $425 million, Honeywell said.

Honeywell said it expected its deal to have no effect on 2012 profit and to boost 2013 earnings.

3M said its deal would reduce earnings by 5 cents per share in the first months following closure.

(Reporting by Scott Malone in Boston; Editing by Lisa Von Ahn)